PRODUCT DISCLOSURE STATEMENT

Transcription

1 IBM AUSTRALIA LIMITED SUPERANNUATION FUND Trustee: Coonara Superannuation Services Pty Ltd (ABN ) The Fund Contact Bruce Watt Fund Secretary IBM Australia 55 Coonara Avenue West Pennant Hills NSW 2125 PRODUCT DISCLOSURE STATEMENT for former IBM GSA Schedule 13 members (ex Westpac Heritage Defined Benefit members) who joined on 1 April 2004 Your member information booklet Mail: PO Box 400 Pennant Hills NSW 2120 Telephone (02) Fax (02) Fund Helpline: ENTER HERE Prepared 1 July 2004

2 PRODUCT DISCLOSURE STATEMENT ABOUT THIS DOCUMENT Coonara Superannuation Services Pty Ltd (ABN ) is the trustee of the IBM Australia and the issuer of this Product Disclosure Statement (PDS). Any reference throughout this PDS to the Trustee, we or us means Coonara Superannuation Services Pty Ltd. Fund means IBM Australia. Any reference to employer or IBM is to IBM Australia Ltd (ACN ) and any such of its subsidiary and associated companies as may participate in the Fund. Any reference to financial adviser means a licensed or appropriately authorised, financial adviser. This PDS describes in simple terms the benefits provided in Part II A of the Fund for former IBM GSA Schedule 13 members (ex Westpac Heritage Defined Benefit members) who transferred from the IBM Global Services Australia Superannuation Fund on 1 April The PDS provides: an outline of the main features and benefits provided by the Fund details of current fees that may impact your accounts; and other useful information. This PDS should be read carefully and kept for future reference. The information contained in this PDS is general information only and does not take into account any persons individual financial objectives, financial situation or needs. We recommend that you speak to a financial adviser if you need help in making an investment decision. The value of your super may rise and fall from time to time. The Trustee and your employer do not guarantee the investment performance, earnings or return of capital invested in any of the investment options of the Fund made available to members through this PDS. 2

3 UP-TO-DATE INFORMATION The information contained in this PDS is up-to-date at its preparation. However, some of the information can change from time to time, for example, fees or the structure of one of the investment options. If there is a material change, inaccurate statement or omission, the Trustee will inform you as required. For other changes and information about any investment option, you can call the Fund Helpline on for an update. THE TRUSTEE AND TRUST DEED The Fund is a regulated complying superannuation fund, which means it is eligible for concessional taxation treatment, which operates as a trust, separate from IBM, and is managed by a trustee company, Coonara Superannuation Services Pty Ltd. The Fund s assets are kept separate from your employer s assets. This means the Fund s assets can t be used to pay any debts of IBM. The Fund is an employer sponsored superannuation fund which is used by the employer to provide some or all of your superannuation benefits as a member and employee. The Fund is governed by a legal document called the Trust Deed, including a set of governing rules. The Trust Deed describes the rights and benefits of all Fund members, as well as the duties and obligations of the Trustee and IBM. If there is any disagreement between the Trust Deed and this PDS, the Trust Deed will be the final authority. You can obtain a copy of the Trust Deed by calling the Fund Helpline on or writing to the Fund Contact at the address shown on the front cover. The Trust Deed requires the Trustee to comply with the Superannuation Industry Supervision legislation (SIS) and other legislation which governs superannuation funds. The Trustee s main responsibilities are to make sure: your rights and interests as a member are protected; benefits are paid correctly and at the correct time; the Fund s assets are invested properly; and the overall operation of the Fund is conducted in accordance with the Trust Deed and relevant legislation. Professional help Professional independent advisers such as investment managers, administrators, consultants, actuaries, lawyers and auditors, can be appointed by the Trustee to help it fulfil its responsibilities. Details of any advisers to the Fund will be set out in the Fund s annual report. Advisers fees are paid from the Fund as an expense. 3

4 IF YOU HAVE A PROBLEM The Fund has a process in place for dealing with enquiries and complaints. Additional help is available to members through the Superannuation Complaints Tribunal. For more information, see page 38 of this PDS. Please remember, neither the Trustee, nor IBM can provide you with financial advice as they do not hold an appropriate license. Before making decisions about your super you should seek advice from a financial adviser. We ll keep you informed As a Fund member, you will be kept informed about the progress of the Fund and the growth of your benefits. After joining the Fund, you will receive at least: a welcome letter confirming your choices in the Fund you will also receive confirmation of any balances transferred in and your PIN for accessing the Fund s website an annual report to bring you up to speed on investment performance and what s happened to the Fund over the year an annual member statement showing changes to your super account notification of all material changes or the occurrence of significant events a statement about your benefit when you cease to be a member of the Fund and information about what to do next regular newsletters and investment updates to keep you informed access to a wealth of information and interactive planning tools on the Fund s website 4

5 FURTHER INFORMATION AVAILABLE ON REQUEST As well as sending you regular information about the Fund and answering your questions, the Trustee can provide you with further Fund information including: the Fund s Trust Deed the Fund s investment policy statement the latest audited Fund accounts the Fund s Privacy Policy Statement the rules covering the appointment and removal of member representative directors on the Trustee board the Fund s enquiries and complaints procedures If you d like to see copies of any of these documents contact the Fund Helpline on There is no charge for this information. You will also have access to the Fund s website to help you make the most of your super. By logging on to you will be able to find out how much super you have, read the latest news and tips to grow your wealth and much more. As well as checking your own super details online, you can: View recent contributions received and details of amounts transferred into the Fund from previous super funds (under Transfers in ) Update your Change your personal details Access standard forms Select your own PIN for the website You will need your Member Number and PIN to login to the Fund s website. If you lose your PIN, contact the Fund Helpline on and a replacement PIN will be issued. When you leave the Fund, you will receive further information about your benefit entitlement and what next to do with it. 5

6 Stay in touch Please take the time to carefully read this PDS and other information referred to, as generally superannuation is an increasingly important component of financial planning, both during your working life as well as for retirement. The Fund Contact welcomes any questions you may have about your superannuation benefits and may be contacted at: The Fund Contact Bruce Watt Fund Secretary IBM Australia 55 Coonara Avenue West Pennant Hills NSW 2125 Mail: PO Box 400 Pennant Hills NSW 2120 Telephone (02) Fax: (02) Fund Helpline: Keep us informed To help with the smooth administration of your benefits, please let us know if your home address or your personal details change. We can only send you information about the Fund and your benefits if we have your current address. 6

7 JOINING THE IBM AUSTRALIA LIMITED SUPERANNUATION FUND WHO CAN JOIN THE FUND? You became a member of Part II A of the Fund from 1 April 2004 following the transfer from the IBM Global Services Australia Superannuation Fund (IBM GSA Fund). As a new member of the Fund, you may need to review some decisions about your super. This PDS provides an outline of the main features and benefits provided by the Fund. You should keep this PDS somewhere safe for future reference. HERE S WHAT YOU NEED TO DO You do not need to do anything to become a member of the Fund, but you may want to revisit the following: Step 1 Do you want to put extra money into super? You can change your nominated contribution rate. You can also make additional contributions to your SuperSave account. You can also make lump sum deposits from other money you have. If you have other super accounts you can transfer (or roll over ) all your super into your Fund account. See the section on page 44 for more details. Step 2 Understand your cover A benefit is payable if you die or become disabled while a member of the Fund. See the section on page 59 for more information. Step 3 Who will receive your benefit in the case of your death? The Trustee must decide who your super is paid to if you die. To guide the Trustee, it s in your interest to keep your Nomination of Beneficiaries up to date. See the Nominating your section on page 71 for more information on who is eligible to receive your death benefit. Step 4 Avoid extra tax by providing your tax file number Providing your tax file number when you join the Fund means avoiding paying more tax than you have to. See the Tax and Super section on page 74 for more details. You will also need to complete a Tax File Number Form if you have not already supplied this. 7

8 SUMMARY OF THE MAIN FEATURES OF THE FUND The main features of Part II A of the Fund include: the option to adjust your nominated contribution rate within 0-8% of salary to suit your changing circumstances. a benefit paid when you leave IBM. a benefit paid if you die whilst still employed by IBM. a benefit paid if you become totally and permanently disabled whilst still employed by IBM. the option to make personal contributions either on a before-tax (salary sacrifice) or after-tax basis. the option to roll over superannuation benefits from other funds. a benefit is paid if you become totally and temporarily disabled whilst still employed by IBM. 8

9 GETTING TO KNOW YOUR FUND THIS SECTION EXPLAINS: WHY YOUR SUPERANNUATION IS IMPORTANT 10 THE BENEFITS OF BEING A MEMBER OF THE FUND 11 RISKS ASSOCIATED WITH BEING A MEMBER OF THE FUND 12 HOW YOUR SUPER WORKS 13 BENEFIT MULTIPLE 14 BENEFITS ON LEAVING IBM 17 BENEFITS ON RETIREMENT 22 FEES AND CHARGES 28 SUPER AND PRESERVATION 33 RECEIVING YOUR BENEFIT AND LEAVING THE COMPANY 35 OTHER THINGS YOU SHOULD KNOW 37 Member-representative directors 37 Enquiries and complaints 38 Monitoring enquiries 38 Protecting your privacy 39 Family law and your super 40 Financial position of the Fund 40 OTHER TRUST DEED PROVISIONS 41 9

10 WHY YOUR SUPERANNUATION IS IMPORTANT Many people don t spend much time thinking about superannuation or retirement. Retirement may seem a long way off and it may seem you have little control over your superannuation. However, there are very good reasons why you should not just think about superannuation, but actively take control of it. Have you thought about how much money you will need in retirement to continue to live in the style you are accustomed to? If you have a figure in mind, have you thought about how you are going to achieve this figure? For many people, superannuation will be their largest asset at retirement after their family home. This alone should be reason enough for you to act now and take control of your superannuation. As a regular full-time or regular part-time employee of IBM you became a member of the Fund when all members of the IBM Global Services Australia Superannuation Fund were transferred into the Fund from 1 April As well as saving for your retirement, your super also provides benefits for you and your family if you die or become disabled while a member of the Fund. Ensuring you have saved enough money for the retirement lifestyle you want usually takes careful planning. You should speak to a financial adviser for advice that takes into account your own circumstances. SOME USEFUL DEFINITIONS Your super benefit this refers to the amount paid from the Fund. It doesn t necessarily mean that you ll receive it in cash. It s most likely that at least part of your super will be preserved. Preservation to make sure that your super is used for retirement, it s subject to government preservation rules. Generally, these rules mean you can t access your super in cash until you retire permanently from work and reach your preservation age (varies from age 55 to 60 depending on when you were born). For more details see the Super and Preservation section on page

11 THE BENEFITS OF BEING A MEMBER OF THE FUND Helping you save for retirement Whatever your saving plans are for retirement, the Fund is designed to help you save towards your financial goals for retirement. Super benefits The Fund provides a benefit: when you retire or leave IBM in the event of your death while a member of the Fund in case of total and permanent disablement while employed with IBM in case of total and temporary disablement while employed with IBM. Tax concessions The Government actively encourages Australians to save for their retirement, and one of the ways it does this is by granting tax concessions to money invested by regulated superannuation funds such as the Fund. To obtain the maximum taxation savings, we recommend you speak to a financial adviser. More information on taxation can be found in the section on page 74 of this PDS. Member services The Fund offers members a range of member services including: On-line access to super details Regular newsletters and updates to keep you informed A telephone helpline service. 11

12 RISKS ASSOCIATED WITH BEING A MEMBER OF THE FUND Investment risks As with any investment there is always a degree of risk to being a member of the Fund. You need to be aware that the value of your super in the Fund may rise or fall. There is the risk that if you leave the Fund, you may get less than the amount of contributions paid in by you and your employer because of taxes, expenses and low or negative investment returns. Please refer to the section on page 52 for further details of the investment risks that may impact on your super. Other risks There is also the possibility that your employer may decide to cease or reduce its contributions to the Fund, amend the Fund s Trust Deed or even close and wind up the Fund at some point in the future. This may affect the value of your super account balance or benefit. We will keep you informed if any of these things were to happen. A change in the laws that govern super may also impact on your ability to access your money in the future or affect the tax effectiveness of your super savings. We will keep you informed about any material changes of law which may affect your super. You should discuss any changes with your financial adviser. As a member of the Fund you will incur certain fees and charges see the Fees and Charges section on page 28 for more details. There is a risk that these fees and charges may increase from time to time which may affect your super account balance. You ll be provided with 30 days prior written notice of any such increases. 12

13 HOW YOUR SUPER WORKS Your style of benefit for retirement, permanent disablement or death is known as a defined benefit. That means that your super payout is calculated using a formula. If you resign, or leave in certain other circumstances, you will be entitled to a lump sum withdrawal benefit which is based on how much you choose to contribute and the Fund s investment performance see Benefits on leaving IBM on the page 17. The formula for determining your defined benefit payout is based on your nominated contribution rate, how long you have been a member and your final average salary. The temporary disablement benefit is a percentage of your superannuation salary. Your defined benefits are funded by your contributions (if any), investment earnings and contributions that IBM is required to make if the Fund's assets are not adequate to cover the benefits. The Fund's investment performance does not affect benefits based on a formula your benefits will be calculated using the formula in any case. IBM carries the investment risk. How your Super works Defined Benefit Multiple The Defined Benefit Multiple (DBM) is based on member nominated contribution rate times the years of service when member made contributions x FAS Your FAS is the average of your annual superannuation salary in the three years immediately before your retirement or separation from the company + SuperSave account that you make in excess of your nominated contribution rate go into your SuperSave account and are invested and earn interest Surcharge account 13

14 BENEFIT MULTIPLE Your benefit multiple is a number that results from your Nominated contribution rate(s) during your membership and how long you contributed at that rate. Annual nominated member Annual benefit Annual increase contribution rate accrual rate in benefit multiple CASE STUDY 0% 8% % 10% % 12% % 14% % 16% % 18% % 20% % 22% % 24% 0.24 Building up your benefit multiple Let s say you are a member for 15 years (some of which was with Westpac and the rest with IBM), and you contribute 1% for the first 10 years, then 8% for the last five years. The benefit accrual rate for 1% contributions is 10%, so for each of the first 10 years, your benefit increases by 10% x FAS (an annual increase in benefit multiple of 0.10). The benefit accrual rate for 8% contributions is 24%, so for each of the last 5 years your benefit increases by 24% x FAS (an annual increase in benefit multiple of 0.24). For the 10 years of contributing at 1%, you have a benefit multiple of % x 10 years = 0.10 x 10 = 1.00 For the five years of contributing at 8%, you have a benefit multiple of % x 5 years = 0.24 x 5 = 1.20 After 15 years your benefit multiple is therefore 2.20 (or an average of ). Your benefit statement each year shows your accrued and average benefit multiple to date. This will help you decide your future nominated contributions. 14

15 For part-time employees, your benefit multiple and maximum benefit multiple are calculated on a pro rata basis, depending on the number of hours paid (excluding overtime hours). CASE STUDY Taking the previous case study but assuming you work an average of 19 hours a week (compared with full-time hours of 38 hours a week), your benefit multiple would be: For the 10 years of contributing at 1%, you have a benefit multiple of % x 10 years x 19/38 = 0.10 x 10 x 19/38 = 0.50 For the five years of contributing at 8%, you have a benefit multiple of % x 5 years x 19/38 = 0.24 x 5 x 19/38 = 0.60 After 15 years your benefit multiple = 1.10 Your FAS is calculated using your equivalent full-time Superannuation Salary. If you joined the Westpac Staff Superannuation Plan before 1 July 1992 (when it was called the Australian Staff Superannuation Scheme) your benefit multiple is 0.18 for each year of membership on a pro rata daily basis prior to that date. 15

16 MAXIMUM BENEFIT MULTIPLE There is a maximum benefit multiple you can build up in the Fund. The maximum benefit multiple you can have is: 7.20, which is the equivalent of contributing an average of 5% over 40 years (i.e. an annual benefit multiple of 0.18 x 40 years) or an average of 0.18 for each year of membership on a pro rata daily basis. Once you reach the maximum benefit multiple of 7.20, nominated contributions must stop. Any further nominated contributions received will not count towards a higher benefit multiple. Instead, they will be transferred (including interest) to your SuperSave Account when your benefit becomes payable. CASE STUDY Maximum benefit multiple over your membership Let s say you are a member for 15 years. Your maximum benefit multiple over that period would be 2.70 (i.e x 15 years). You could reach the maximum by contributing at 4% for 10 years then 7% for 5 years: For the 10 years of contributing at 4%, you have a benefit multiple of % x 10 years = 0.16 x 10 = 1.60 For the five years of contributing at 7%, you have a benefit multiple of % x 5 years = 0.22 x 5 = 1.10 After 15 years your benefit multiple =

17 BENEFITS ON LEAVING IBM You will be entitled to a withdrawal benefit if you leave IBM and do not qualify for a retirement, disablement or death benefit. There are two types of withdrawal benefit. LUMP SUM WITHDRAWAL BENEFIT All members are eligible for this benefit. Part of this benefit may be subject to preservation. This benefit is made up of two components: 1. your nominated contributions (limited to an average of 5%, the excess going to your SuperSave Account) with interest, payable to you in all cases 2. a component funded by IBM, which is the greater of: a) 10% of your own nominated contributions with interest for each year of membership, calculated on a prorata daily basis (to a maximum of 100% of your contributions with interest) or b) your SG benefit. SUPERANNUATION GUARANTEE (SG BENEFIT) The SG legislation requires employers to provide a minimum level of superannuation for employees. This is equal to 9% of your Superannuation Salary. The SG benefit is not in addition to the other benefits provided by the Fund. When you leave the Fund, IBM will ensure that your Fund benefit (not including any nominated or SuperSave contributions you have made or benefits rolled into the Fund from other sources) is at least equal to your SG benefit. If a defined benefit becomes payable, it will usually be higher than the SG benefit. Please note also that the SG benefit must be preserved. 17

18 CASE STUDY Let s say you resign four years after joining IBM, but with six years membership in the Westpac Staff Superannuation Plan, having contributed at an average rate of 5% over your total membership. Let s assume the following facts: Nominated contributions with interest: $6,000 Years of membership: 10 SG benefit: $6,600 Calculating your benefit: Your nominated contributions with interest $6,000 plus the greater of: a) 10% of your nominated contributions with interest for each year of membership: 10% x $6,000 x 10 = $6,000 or b) your SG benefit: $6,600 $ 6,600 $12,600 Your lump sum withdrawal benefit equals $12,600. Note: if you joined the Westpac Staff Superannuation Plan before 1 July 1992 (when it was called the Australian Staff Superannuation Scheme) your lump sum withdrawal benefit will also include: Your nominated contributions up to 30 June interest + 10% of your nominated contributions up to 30 June 1992 plus interest for each year of membership, calculated on a pro rata daily basis (to a maximum of 100% of your contributions with interest). 18

19 DISCOUNTED ACCRUED BENEFIT This benefit will be available to you if you leave IBM and: have at least ten years membership* on the date you leave service or joined the Westpac Staff Superannuation Plan on or before 11 October 1996, are age 40 or over and have at least five years membership*. This benefit is fully preserved. This benefit is the greater of: Benefit multiple x FAS reduced by 2% for each year between the date you leave service and age 55 (calculated on a pro rata daily basis). (Note that the benefit multiple is subject to the maximum described in on page 16) and your SG benefit plus your nominated contributions with interest. Your total benefit = Your lump sum withdrawal benefit (or discounted accrued benefit if applicable) plus your SuperSave Account plus your Rollover Account, less your Surcharge Account (if any). * For this purpose membership refers to combined membership in the Westpac Plan, the IBM GSA Fund and the Fund. 19

20 CASE STUDY Let s say you leave on 31 December 2009 age 50, after 30 years combined membership in the Fund, the IBM GSA Fund and the Westpac Plan (i.e. with 10 years membership after 31 December 1999). During your total memberships over that time you have an average nominated contribution rate of 5%. So you have built up a benefit accrual rate of 0.18 for each year of membership or a total benefit multiple of 5.4 (i.e. 30 years x 0.18). Your benefit multiple to 31 December 1999 is 3.6 (i.e. 20 years x 0.18). Both multiples equal the maximum benefit multiple (of an average of 0.18 p.a.) that you can build in the Fund. For the last three years of your Fund membership, your package values are $50,000 (2007), $52,000 (2008) and $54,000 (2009). Calculating your FAS for the membership period: Before 31 December 1999 For the 20 year membership period before 31 December 1999, your benefit will be based on your FAS calculated as the average of your Superannuation Salary over the last three years based on 79.5% of package value. Year Superannuation Salary for Membership before 31/12/ % x $50,000 = $39, % x $52,000 = $41, % x $54,000 = $42,930 FAS = ($39,750 + $41,340 + $42,930)/3 = $41,340 From 31 December 1999 For the 10 year membership period from 31 December 1999, your benefit will be based on a higher FAS calculated as the average of your Superannuation Salary over the last three years based on 100% of package value: FAS = ($50,000 + $52,000 + $54,000)/3 = $52,000 20

21 CASE STUDY Calculating your discounted accrued benefit for the membership period: Before 31/12/99 Benefit multiple to 31/12/99 (3.6) x FAS for membership before 31/12/99 ($41,340) = 3.6 x $41,340 = $148,824 Age 50 so reduce by: 5 years x 2% = 10% $242,424 - ($242,424 x 10%) = $218,182 Your discounted accrued benefit = $218,182. From 31/12/99 Total benefit multiple (5.4) less benefit multiple to 31/12/99 (3.6) x FAS for membership after 31/12/1999 ($52,000) = ( ) x $52,000 = $93,600 Your total benefit = this benefit plus your SuperSave Account plus your Rollover Account, less your Surcharge Account (if any). IN BRIEF + = $242,424 two types of withdrawal benefit the lump sum withdrawal benefit (for all members) and the IN THE discounted PLAN FOR accrued LESS THAN benefit FIVE (available YEARS to some members) part or all of your withdrawal benefit may be subject to preservation. 21

22 BENEFITS ON RETIREMENT You will be entitled to a lump sum retirement benefit if you leave IBM, are age 55 or over and have been in the Fund for at least five years. Your lump sum retirement benefit equals benefit multiple x FAS. (Note that the benefit multiple is subject to the maximum described on page 16). Your benefit on retirement will be calculated in the same way as the discounted accrued benefit discussed on page 19. However, there will be no reduction as you will be over age 55. So using the case study on page 20, but assuming you retire at the age of 60 on 31 December 2009, your retirement benefit will be $242,424, i.e. there will not be a 10% reduction. Your total benefit = this benefit plus your SuperSave Account plus your Rollover Account, less your Surcharge Account (if any). MINIMUM RETIREMENT BENEFIT Your retirement benefit is subject to a minimum of your lump sum withdrawal benefit. IN THE FUND FOR LESS THAN FIVE YEARS? If you have been in the Fund for less than five years, you will instead be entitled to the lump sum withdrawal benefit see page 17. IN BRIEF your retirement benefit is based on a formula of benefit multiple x Final Average Salary IN THE PLAN FOR LESS THAN FIVE YEARS a higher nominated contribution rate means a higher benefit multiple and a higher defined benefit on retirement the maximum benefit multiple you can have is 0.18 x membership nominated contributions at an average rate of 5% over your membership give the maximum benefit multiple part of your retirement benefit may be subject to preservation. 22

23 WAYS TO TAKE YOUR RETIREMENT BENEFIT To give you the flexibility you need, the Fund offers a number of ways you can take your benefit: lump sum Option 1 or part lump sum/part pension Option 2 or purchased pension Option 3 It may suit you better to take a lump sum, for example if you want to pay off a mortgage or invest. You may prefer to take a pension so you know you ll have a regular income. It s up to you. Lump sum Option 1 The lump sum option is the benefit explained on page 17. Part pension/part lump sum Option 2 The pension option is based on the benefit available under the lump sum option, but allows you to take your benefit as part lump sum, part pension. You choose how much lump sum you want, but you must take as a lump sum at least 50% of the lump sum retirement benefit (plus all your SuperSave balance and Rollover Account less your Surcharge Account). The remainder of the benefit is divided by a factor of 10.8 to convert it to a pension. If you retire before age 60, the pension is reduced by 3% for each year from date of retirement to age 60 (calculated on a pro rata daily basis). Features of the pension: payable for the rest of your life indexed 1 January each year in line with the September Consumer Price Index (CPI) to a maximum of 5% cannot be converted to a lump sum is a complying pension for Reasonable Benefit Limits purposes. 23

24 If you plan to access social security benefits after leaving IBM, you should seek advice on how taking this pension may affect your social security benefits. CASE STUDY Let s say you want to take your retirement benefit as 60% lump sum, 40% pension. Let s assume the following facts: Lump sum retirement benefit:$342,000 Age: 58 Step 1 calculating your lump sum: Lump sum retirement benefit ($342,000) x 60% = $205,200 Step 2 calculating your pension: Lump sum retirement benefit lump sum part ($342,000 - $205, 200)/10.8 = $12,667 p.a. Age 58 so reduce by 2 years x 3% = 6% $12,667 - ($12,667 x 6%) = $11,907 p.a. Your lump sum equals $205,200 Your pension equals $11,907 p.a. Your total lump sum = this lump sum amount plus your Rollover Account plus your SuperSave Account, less your Surcharge Account (if any). Your spouse and dependent children may also receive benefits if you die. (See Payment of death benefits section on page 71 for more details) 24

25 Purchased pension Option 3 You may want to have a mix of lump sum and pension, but with a higher pension amount than the pension in Option 2 allows. The purchased pension option gives you this opportunity. It involves you buying a pension, using part or all of your lump sum (including your SuperSave balance) from Option 1 or 2. A purchased pension is calculated from factors provided by the Plan s Actuary, based on information current at the time of purchase. This means that, for a given dollar amount, the purchased pension you buy may be more or less than the pension in Option 2. Apart from the way it is calculated, a purchased pension has the same features as the pension in Option 2. Your spouse and dependent children may also receive benefits if you die. (See Payment of death benefits section on page 71 for details.) Single life purchased pension Option 4 Buy a pension with no spouse pension and children s allowances Pension Options 2 and 3 provide a spouse pension and children s allowances when you die. If you want a pension but do not need these features, you can use part or all of your lump sum (from Option 1) and part or all of your SuperSave balance to buy a single life purchased pension. You cannot buy this type of pension if you have taken Option 2 or 3. Like the purchased pension, a single life purchased pension is calculated from factors provided by the Plan s Actuary, based on information current at the time of purchase. However, as there is no spouse pension or children s allowance the same dollar amount will buy you a bigger pension than Option 3. Apart from the way it is calculated and the fact that it does not provide a spouse pension or children s allowance, the single life purchased pension has the same features as the pension in Option 2. If you die within five years after retiring, an amount is payable to your estate. The amount payable is the value of the pension you would have received during the rest of the five-year period. IN BRIEF there are a number of ways you can take your retirement benefit IN THE PLAN lump FOR sum LESS THAN FIVE YEARS pension combination of lump sum and pension the choice is yours pensions are payable for the duration of your life and are indexed annually. 25

26 Spouse pension and children s allowance If you choose pension Option 2 or purchased pension Option 3, your spouse and dependent children may receive benefits after you die. If you die within five years after retiring, your full pension will continue to be paid to your spouse and/or dependants for the rest of the five-year period (indexed each year). If you have no dependants, your estate will receive a lump sum payment of the present value of the pension you would have received over the rest of the five-year period. After the five-year period, the spouse pension and children s allowances outlined below will apply. If you die more than five years after you retire, and a spouse survives you for more than 14 days, your spouse will receive a pension equal to 50% of the pension you were receiving when you died. The spouse pension is indexed each year and is payable for the life of your spouse. If you are survived by dependent children, they will receive children s allowances. The amount they receive will depend on how many dependent children you have and whether you have a surviving spouse. (See the table on page 27). Again they must survive you for more than 14 days. Payment of a child s allowance stops when the dependent child reaches age 18, unless they are in full-time education of a type approved by the Trustee. The Trustee then has the discretion to continue paying the allowance to age 23. Note: to be entitled to the spouse pension, your spouse must satisfy one of the following conditions: was your spouse at the date you retired from IBM or was your spouse for at least three years at the date you died. The term spouse has a special meaning. To qualify as a spouse, the spouse must be: legally married to you and living with you on a permanent and bona fide domestic basis, wholly or mainly maintained by you; or in the Trustee s discretion was legally or morally entitled to have been wholly or mainly maintained by you or where no person was legally married to you, living with you on a bona fide domestic basis as your husband or wife. 26

27 Amount of children s allowance Surviving spouse No surviving spouse One dependent child 20% of your pension 40% of your pension Each dependent child 12.5% of your pension 25% of your pension (where there are two or more) Total allowance not to Total allowance not to exceed 50% of your exceed your pension. pension. The spouses pension and the children s allowances are indexed on 1 January each year in the same manner as your pension. 27

28 FEES AND CHARGES The following tables show the Fund s expenses or fees and charges that might apply to your superannuation benefits. All expenses are current and may be revised, increased or added to or adjusted by the Trustee from time to time in order to pass on any new or increased fees levied by service providers to the Fund, incurred in the investment management or administration of the Fund, or implement any changes to, for example, your superannuation environment (e.g. Government regulations) or the Trust Deed. The Trustee may also introduce new fees. While it is not anticipated that fees and charges will change, if there is an increase in fees the Trustee must notify you 30 days in advance of the change. No GST is payable by you on any of the fees and charges described below. You should read this fee information carefully, as it s important that you understand how these fees can affect your benefits in the Fund. 28

29 TABLE 1 SIGNIFICANT FEES TABLE Significant fees How much is the fee How the fee is What the fee is for calculated and paid Establishment fee This is the fee to set up your account in the Fund Nil NA Contribution fee This is the fee charged for the initial and every Nil NA subsequent investment you make (including any contributions made to the Fund on your behalf e.g. by your employer) Withdrawal fee This is the fee charged for each payment paid out Nil This is deducted from from the Retained Benefits section your benefit before it is paid from the Fund Termination fee This is the fee when you close your account in $ This is deducted from the Fund your benefit before it is paid from the Fund On going fees This is the total of all ongoing administration 0.2%-0.55% See detail on page 30 investment management, expense recovery and investment fee in the Breakdown of other fees charged by the Fund. A breakdown of ongoing fees table fees is shown in the Breakdown of ongoing fees table on page 30 Adviser service fee This is the fee charged by your adviser for advice Nil There is no fee because about your investment in the Fund. An adviser may neither IBM nor the also receive other amounts such as commission: trustee is licensed to see important additional disclosure provide financial services advice 29

30 TABLE 2 BREAKDOWN OF ONGOING FEES Ongoing fees Amount How and when is it paid Administration fee This is the fee charged to cover the general administration of the Fund Nil Investment management fee This is the fee for managing the Fund s assets 0.2%-0.55% Investment management fees are deducted from the investment income before calculating the crediting rate Issuer fee This is the fee for the product issuer s services in Nil NA overseeing the Fund s operations and/or providing access to the Fund s investment options Expense recoveries This is an estimate of the out-of-pocket expenses the Nil NA Trustee is entitled to recover from the Fund Member fee This is a member-keeping fee charged by the Fund Nil NA 30

31 IMPORTANT ADDITIONAL DISCLOSURE ITEMS All fees and charges are current at the date of issue and may be revised, added to, increased or adjusted by the Trustee from time to time. Administration fees Administration fees are not deducted from Members. Investment manager s fees Investment management fees are deducted from the investment income prior to the crediting rate being set. These expenses include costs incidental to the acquisition, realisation, management and valuation of the assets of each investment option, and fees paid for the provision of investment advice, investment management and/or custodial services in respect of each investment option. Insurance premiums IBM pays the cost of providing the insured components of the death and disablement benefits. 31

32 TABLE 3 FAMILY LAW: FEES FOR INFORMATION AND FOR SPLITTING YOUR SUPER Where fees apply Fee Who pays the fee Application for information in the format specified under the Family Law Act Nil NA where no valuation is required Splitting a benefit $500 Shared equally by both parties and will be deducted from each super benefit at the time the benefit is split Flagging a benefit Nil NA For more information about Family Law and how it may affect you, contact the Fund Helpline on Member protection In line with Government legislation, benefit account balances under $1,000 are protected from erosion by fees and charges. The Trustee currently applies this requirement by ensuring that the total of any administration fees charged to your account will be no more than the earnings credited to your account. However, this practice may change from time to time, for example, during periods of poor or negative investment returns. 32

33 SUPER AND PRESERVATION Government legislation is designed to make sure that your super money is used for retirement and, consequently, there are restrictions on when you can access your benefit. Your benefit may be made up of: an unrestricted non-preserved amount a preserved amount a restricted non-preserved amount The unrestricted non-preserved amount (if any) is that part of your super benefit that is payable in cash when you leave your employer. It usually comprises the non-preserved components of rollovers from other super funds. Restricted non-preserved amounts are payable when you cease employment with your current employer. Preserved amounts of over $200 are only accessible in cash if you satisfy one of the conditions permitted under superannuation law as shown below: You have permanently retired from work on or after your preservation age (see below) You are aged 60 or more and you resign or retire from your current employer You are aged 65 or more The Trustee is satisfied that you are permanently incapacitated* You have compassionate grounds for applying* You suffer severe financial hardship* You leave Australia permanently (if you are a temporary resident and satisfy certain conditions contact the Fund Helpline on for more details). *as specified under superannuation law and permitted under the Trust Deed. 33

34 Your preservation age Your preservation age (i.e. the age at which your preserved super can be paid to you in cash if you have permanently retired from the workforce) depends on your date of birth: Date of birth Preservation age Before 1 July July 1960 to 30 June July 1961 to 30 June July 1962 to 30 June July 1963 to 30 June On or after 1 July The law requires that preserved super stays invested in an approved superannuation arrangement. This could include transferring any preserved benefit from the Fund to another employer s fund, a personal super fund, a rollover fund or a retirement savings account in circumstances where you cease employment with an employer. 34

35 RECEIVING YOUR BENEFIT AND LEAVING THE COMPANY After you have left your employer you will receive a statement from the Fund that shows: The gross dollar value of your super How it was worked out How much of your super must still be preserved, and Any tax payable on your benefit. When you leave IBM, you generally have 30 days to request payment of your benefit or nominate an approved superannuation facility to which you wish to rollover your benefit. You can rollover your benefit into an approved facility including a superannuation fund, deferred annuity, approved deposit fund, eligible rollover fund, or retirement savings account. An important advantage of rolling over your benefit is that tax is deferred and income earned on the benefit is taxed at concessional rates. IF YOU DON T GIVE INSTRUCTIONS Account balances less than $45,000 If your account balance is less than $45,000, and you don t advise the Fund within 30 days of being notified where to pay your benefit or circumstances where we cannot contact you and you are under the eligible age for a Government age pension (currently age 65 for men and age 62 for women), your benefit may be transferred into an Eligible Rollover Fund (ERF) nominated by the Fund. An ERF is a special fund approved by the Australian Prudential Regulation Authority to hold benefits for members of funds who cannot be traced or have not advised their funds how to pay their benefits. ERFs are designed as holding funds and are required to provide member protection for all accounts. As a result the rate of return in the ERF may be lower than in another superannuation fund. You should ask a financial adviser about the best place to rollover your benefit when you leave service. The Trustee has selected the National Preservation Trust (NPT) as the Fund s ERF and their contact details are below. Once your money has been rolled over, the Trustee is no longer responsible for payment of your benefit and you must contact the NPT directly. If you ignore your benefit in NPT until after you reach the eligibility age for a Government pension, it will become unclaimed money and paid to the Office of State Revenue. You will then need to contact the authority directly to claim your benefit. The NPT currently provides a capital guarantee on the original amount of benefit it receives. 35

36 Contact details: National Preservation Trust C/- Australian Administration Services GPO Box 2163T, Melbourne VIC 3001 Phone: (03) (in Melbourne) (elsewhere in Australia) Set out below is a summary of some of the more significant features of the NPT, current at the date of this PDS: The NPT has adopted a capital stable investment strategy. There is no investment choice available to members in the NPT. The NPT has a two tiered basis for crediting interest to members accounts. This comprises a low interest rate, which applies to the first $2,000 of members accounts and a high interest rate, which applies to the balance in excess of $2,000. The high rate is based on a target rate which is set to reflect cash rates. If the actual annual return for the NPT exceeds the target rate, part of the excess earnings are transferred to reserves, subject to a maximum of 10% of members accounts. If the actual return for NPT falls short of the target rate, a transfer from reserves will occur to make up the shortfall, subject to a minimum reserve level of zero. Interim crediting rates are adopted for members that leave the NPT during the current financial year. An administration levy is deducted from members accounts. The NPT does not deduct more in administration than the interest credited. The administration levy is used to pay the administrators fees and any excess is then used to pay other expenses such as fees payable to the trustee of the NPT and investment adviser. Being an ERF, the NPT is unable to accept contributions from members or their employers, however, rollovers from other superannuation funds are permitted. Current fees and investment returns together with other information regarding the NPT can be obtained directly from the NPT at the address referred to above. Account balances of $45,000 or more If you do not provide instructions within 30 days after terminating employment, your benefit will automatically be rolled over to the Fund s Retained Benefit Members section if you satisfy the Retained Member eligibility criteria, which specify that you must be leaving IBM on grounds of redundancy/retrenchment or you must have a minimum benefit balance of $45,000 to the Fund s ERF. For more information on the Retained members section see page 72. If your benefit is rolled over to the Retained Benefit section, it will stay invested in the Fund until you choose to roll it over to another fund, take it in cash when eligible or until it must be paid to the NSW Office of State Revenue as unclaimed money. 36

37 UNCLAIMED MONEY If you are over the eligible age for a Government age pension and you have not told the Trustee where to pay your super and we cannot contact you, then your benefit will be considered to be unclaimed money and will be placed with the relevant NSW Office of State Revenue. You need to approach the authority to claim any such money directly at the following address: NSW Office of State Revenue Locked Bag 5215 Parramatta NSW 2124 Phone: osradmin@osr.nsw.gov.au OTHER THINGS YOU SHOULD KNOW Member-representative directors The Trustee has ten Trustee directors. Half of these are appointed by your employer and half elected by the members of the Fund. As a member, you will have an opportunity to participate in the process of choosing the five member representative Trustee directors. All eligible members of the Fund can stand, nominate others and vote in Fund elections for member representative Trustee directors. Under the current election rules, member-representative directors will cease to hold office if: they cease to be a member resign as a member-representative director the Trustee receives a written notice signed by more than 50% of members at the date of receipt of such notice calling for the removal of that member-representative director they become ineligible under law. You can get a copy of the current election rules by calling the Fund Helpline on

38 Enquiries and complaints Most queries can be sorted out over the phone, but if we are unable to help you immediately, you may be asked to put your question in writing. You can write to: Enquiries and Complaints Officer Bruce Watt IBM Australia PO Box 400 Pennant Hills NSW 2120 We will generally reply to your enquiry within 28 days. By law we are required to try and resolve any complaints within 90 days. Sometimes further time is required for complicated matters. If we need more time we will let you know. If you have a complaint and you are not satisfied with the response, or the matter can t be resolved, you may be able to refer the matter to the Superannuation Complaints Tribunal (SCT). The SCT is an independent government body which is set up to help resolve disputes between super funds and their members. Any complaints must be lodged with the Tribunal within certain time limits. For more information you can contact the SCT on or write to: Superannuation Complaints Tribunal Locked Bag 3060 GPO Melbourne Victoria 3001 Monitoring enquiries The Trustee may, at its discretion, monitor or record enquiries or transactions made by telephone. This is done for reasons of accuracy, security and service. 38

39 Protecting your privacy In order to provide your superannuation benefits, and to properly manage the Fund, it s necessary for the Fund to hold personal information about you. This information identifies you as a Fund member and typically includes your name, address, date of birth, gender, occupation, salary, tax file number and any other information that is required. The Fund generally collects this information from either you or your employer. Your personal information may be disclosed to the Fund s administrator and professional advisers, insurers, government bodies, your employer and other parties as required and permitted by law, including the Trustee of any other Fund you may transfer to. By becoming a member of the Fund, it s assumed that you consent to this handling of your personal information. If you do not provide the Fund with your personal information, the Fund may not be able to provide all of your superannuation benefits. You may request access to your personal information held by the Fund. Should any of your personal information be incorrect, you have the opportunity to correct it. There are, however, some circumstances where you may be denied access to your information. The Fund s Privacy Officer will advise if any of these circumstances apply. The Fund abides by the National Privacy Principles under the Privacy Act 1988 (Cth) and has adopted a Privacy Policy which sets out in detail the way it handles members personal information. If you would like a copy of the Fund s Privacy Policy please contact the Fund s Privacy Officer by writing to: The Privacy Officer Bruce Watt IBM Australia PO Box 400 Pennant Hills NSW